Over the past few weeks, lawyers in New York received some unpleasant news. Royal Abstract, Corporation Service Company and other title abstract and document retrieval service companies recently alerted clients that beginning Sept. 1, 2010, New York Sales and Use Tax1 will be collected on the delivery of certain title abstracts and document searches, such as good standing certificates, UCC and related lien searches, and zoning lot certifications. This change was not required by any change to existing sales tax law. Rather, it resulted from new administrative guidance issued by the New York Department of Taxation and Finance in July of this year, in the form of a Technical Services Bureau Memorandum (TSBM).2
Technical Services Bureau Memoranda are regularly issued by the tax department to set forth its policy, often in connection with legislative changes. The TSBM was issued due to numerous unsettled questions concerning the taxation of information services. In doing so, the TSBM purportedly “clarified” the tax department’s policy with respect to documents sold by private entities, and announced the tax department’s change in policy with respect to the taxation of abstracts of title and risk management analysis reports.
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